Mexico’s BMV chief defends MILA entry

Jan 22, 2014

Despite low trading on Latin America’s integrated stock exchange, there is “more opportunity” as part of Mila, says Pedro Zorrilla, head of the Bolsa Mexicana de Valores

The director general of Mexico’s stock exchange
has defended the organization’s move to join the
integrated Latin American market, Mila, despite low trading on
the platform and his Brazilian counterpart’s
decision to stay out.

"So, regardless of the starting point in terms of liquidity
or depth, all the markets are advancing. There’s
more opportunity as part of Mila, than outside it."

Mexico’s financial reform, approved by its
Congress in November, opened the way for the exchange to join
Mila. The integration will create Latin America’s
largest bourse by market capitalization, at over $1tn.

Still, trading across the three exchanges has been minimal
since its inception. "The truth is that Mila
hasn’t traded much," says Jorge Errázuriz,
managing partner at BTG Pactual Chile.

In October, less than $6 million of stock was sold across
the platform. Buying and selling on Santiago’s
stock exchange alone was nearly three times the deal flow on
Mila’s infrastructure.

Brazil’s BM&FBovespa considered merging
with Mila but decided against it because of the disparity in
scale. Nonetheless, the incorporation of Mexico will broaden
Mila’s scope, and encourage a greater flow of
investment, says José Antonio Martínez, chief
executive of the Santiago stock exchange.

"Mexico is the second largest market in Latin America after
Brazil, which means it will bring to Mila greater liquidity, a
larger number of participants and, of course, it will broaden
the range of financing options for our issuers, trading options
for our intermediaries, and the range of instruments for our
investors," he said. LF